International Flows of Remittances: Cost, Competition and Financial Access in Latin America and the Caribbean - Toward an Industry Scorecard

This report was presented at the meeting on "Remittances and Transnational Families" sponsored by the Multilateral Fund of the Inter-American Development Bank and the Annie E Casey Foundation. The report:

• Analyzes current trends in money transfers;
• Reviews the features relating to increasing competitive environment;
• Details the reasons and factors influencing the decline in cost;
• Highlights the changes in the remittance industry over five years;
• Examines companies that have had the best performance within the realm of money transfers;
• Measures the impact of companies on indicators such as transaction costs, partnership with financial institutions, consumer satisfaction and agent locations.

The study further presents some of remittances trends in Latin America and the Caribbean:

• Both banking and non-banking financial institutions, such as microfinance institutions, are increasingly becoming major payers of money in Latin America and the Caribbean;
• Remittances boost growth in countries with less developed financial systems by providing an alternative means of financing investment;
• Remittance recipients are more likely to have bank accounts than those who do not receive remittances;
• Some institutions have developed innovative financial products specifically tailored to needs of remittance recipients.

The report highlights some of the prevailing challenges to the industry:

• Limited financial intermediation exists for remittance recipients;
• Remittance literacy among senders is almost inexistent;
• Current regulatory environment in the United States is making remittance intermediation more expensive and risky;
• Technology solutions to transform remittance senders into bank account holders are yet to be met with a demand for such instruments.

Finally, the report concludes that the opportunities to promote partnerships between money transfer companies and financial institutions are now greater than ever, allowing financial institutions to introduce and sell more financial instruments.